Bottom-Fishing Continues in Vodafone

David Russell | Writer, OptionMonster

Published 10:49 AM ET Mon, 19 Nov 2012
CNBC.com

SHARES

Vodafone

Buyers tried to call the bottom in Vodafone for the second straight session yesterday.

OptionMonster's trade scanners detected the purchase of 5,000 January 25 calls for $0.65. That size was seven times greater than the strike's open interest at the beginning of the day, signaling fresh buying. Similar trades occurred on Wednesday, when the December 25 calls were purchased for $0.65 to $0.67.

Calls lock in the price where investors can buy the stock, making them highly leveraged to a rise in share price. For example, a gain of less than 5 percent will cause those contracts to appreciate by more than 50 percent. However, they will lose most or all of their value if the stock doesn't move.

Vodafone shares fell 1.45 percent to $25.19 yesterday. The global telecommunications carrier has lost about 15 percent of its value in the last three months and now sits around the bottom of its trading range since late 2010. That could be leading some investors to think that it's ready to bounce.